TORONTO, Nov. 6, 2012 /CNW/ - Indigo Books & Music Inc. (TSX: IDG),
Canada's largest book, gift and specialty toy retailer reported a 5.9%
decrease in net revenue for its second quarter ending September 29,
2012. Revenue for the quarter was $185.6 million, down $11.6 million
from last year driven primarily by a delay in the planned launch of the
new Kobo devices. In addition, the Company operated seven fewer Coles
stores. Book sales for the quarter were down only modestly to last
year owing to strong titles as well as effective efforts to drive book
sales both in store and online.

On a comparable store basis, Indigo and Chapters superstores posted a
6.5% decrease in revenue, while Coles and IndigoSpirit small format
stores were down 2.2%.

Commenting on the results, CEO Heather Reisman said, "We are focused on
driving significant margin and productivity improvements and are
pleased that our on-going efforts are reflected in our results. We
will continue to broaden our assortment in our key growth categories to
drive higher top line sales to offset the decline in physical books.
We're also pleased to have the newest Kobo eReaders now in store as top
gift picks for the upcoming holiday season."

The net loss attributable to shareholders of the Company from continuing
operations improved $24.8 million from a loss of $28.8 million last
year to a loss of $4.0 million this year. The significant reduction in
net loss was due to there being no impairment charges in the current
year. In the same period last year, the Company recorded a full write
down of the $25.4 million of goodwill allocated to the Indigo segment.
In addition, the Company experienced improvements in margin and
productivity in the current year.

The net loss per share from continuing operations improved from a loss
of $1.14 per share last year to a loss of $0.16 per share due to the
above noted factors.

In the quarter, the Company's plum rewards program was recognized for
global leadership, earning the award for Loyalty Innovation in Retail at the 3rd Annual COLLOQUY Loyalty Awards. In less than 18 months, five million
Canadians joined the plum rewards program, collecting over seven
billion plum points. Designed in response to customer feedback, plum
rewards help shoppers discover products that match their interests and
passions while rewarding and recognizing their purchases. Plum rewards
members can collect points on virtually every in-store purchase, have
self-service access to personalized recommendations and offers online
or at in-store kiosks, and enjoy special member pricing on online book
purchases.

Also in the second quarter, Indigo launched its award winning annual
Adopt-A-School program, a three week national fundraising campaign that
raised over $580 thousand — the equivalent of over 50 thousand books —
to support 570 participating schools across Canada. Through the program
Indigo helps augment the $1.5 million in grants made annually by the
Indigo Love of Reading Foundation to benefit high needs elementary
schools.

The Board of Directors today approved a quarterly dividend of 11 cents
per common share to be paid on December 5, 2012, to all shareholders of
record as of November 20, 2012.

Forward-Looking Statements
Statements contained in this news release that are not historical facts
are forward-looking statements which involve risk and uncertainties
that could cause results to differ materially from those expressed in
the forward-looking statements. Among the key factors that could cause
such differences are: general economic, market or business conditions
in Canada; competitive actions by other companies; changes in laws or
regulations; and other factors, many of which are beyond the control of
the Company.

Non-IFRS Financial Measures
The Company prepares its unaudited interim condensed consolidated
financial statements in accordance with International Financial
Reporting Standards and International Accounting Standards 34, "Interim
Financial Reporting." In order to provide additional insight into the
business, the Company has also provided non-IFRS data, including
comparative store sales growth, in the press release above. This
measure does not have a standardized meaning prescribed by IFRS and is
therefore specific to Indigo and may not be comparable to similar
measures presented by other companies. Comparative store sales growth
is a key indicator used by the Company to measure performance against
internal targets and prior period results. This measure is commonly
used by financial analysts and investors to compare Indigo to other
retailers. Comparable store sales are defined as sales generated by
stores that have been open for more than 12 months on a 52-week basis.

About Indigo Books & Music Inc.
Indigo is a publicly traded Canadian company listed on the Toronto Stock
Exchange (IDG). As the largest book, gift and specialty toy retailer in
Canada, Indigo operates in all provinces under different banners
including Indigo Books & Music; Indigo Books, Gifts, Kids;
IndigoSpirit; Chapters; The World's Biggest Bookstore; and Coles. The
online channel, indigo.ca, offers a one-stop online shop with a robust
selection of books, toys, home décor, stationery and gifts.

In 2004, Indigo founded the Indigo Love of Reading Foundation, a
registered charity that provides new books and education materials to
high-needs Canadian elementary schools, to address the literacy crisis
in Canada. To date the Foundation, as well as the Indigo "Adopt A
School" program, have contributed $13 million, equating to more than a
million books, to high-needs elementary schools across Canada. Visit loveofreading.org for more information.

To learn more about Indigo, please visit the Our Company section at indigo.ca.

Consolidated Balance Sheets

(Unaudited)

As at

As at

As at

September 29,

October 1,

March 31,

(thousands of Canadian dollars)

2012

2011

2012

ASSETS

Current

Cash and cash equivalents

192,598

45,491

207,601

Accounts receivable

14,092

21,831

12,627

Inventories

247,604

263,918

229,706

Prepaid expenses

4,835

15,285

3,695

Total current assets

459,129

346,525

453,629

Property, plant and equipment

62,111

76,031

67,464

Intangible assets

22,467

31,251

22,810

Goodwill

-

1,216

-

Deferred tax assets

53,986

68,250

48,633

Total assets

597,693

523,273

592,536

LIABILITIES AND EQUITY

Current

Accounts payable and accrued liabilities

198,435

224,159

174,201

Unredeemed gift card liability

37,912

36,292

42,711

Provisions

175

-

232

Deferred revenue

12,882

12,401

11,234

Income taxes payable

111

650

65

Notes payable

-

5,168

-

Current portion of long-term debt

900

1,305

1,060

Total current liabilities

250,415

279,975

229,503

Long-term accrued liabilities

4,448

5,038

5,800

Long-term provisions

391

-

460

Long-term debt

1,045

1,623

1,141

Total liabilities

256,299

286,636

236,904

Equity

Share capital

203,660

202,962

203,373

Contributed surplus

7,570

6,839

7,039

Retained earnings

130,164

4,882

145,220

Total equity attributable to shareholders of Indigo

341,394

214,683

355,632

Non-controlling interest

-

21,954

-

Total equity

341,394

236,637

355,632

Total liabilities and equity

597,693

523,273

592,536

Consolidated Statements of Loss and Comprehensive Loss

(Unaudited)

13-week

13-week

26-week

26-week

period ended

period ended

period ended

period ended

September 29,

October 1,

September 29,

October 1,

(thousands of Canadian dollars, except per share data)

2012

2011

2012

2011

Revenues

185,589

197,248

372,072

385,253

Cost of sales

100,487

111,497

206,875

222,579

Gross profit

85,102

85,751

165,197

162,674

Operating and administrative expenses

90,975

115,579

181,149

208,270

Operating loss

(5,873)

(29,828)

(15,952)

(45,596)

Interest on long-term debt and financing charges

29

39

60

83

Interest expense (income) on cash and cash equivalents

(578)

56

(1,159)

(15)

Loss before income taxes

(5,324)

(29,923)

(14,853)

(45,664)

Income tax recovery

(1,311)

(1,074)

(5,353)

(4,852)

Loss and comprehensive loss for the period from continuing operations

(4,013)

(28,849)

(9,500)

(40,812)

Loss and comprehensive loss for the period from discontinued operations
(net of tax)